Non-bank servicers creating bigger mortgage problems

Sources say that many of the same old problems the NMS partially sought to address are back with the nonbank servicers, including long delays in reviewing loan modifications and wrongful denials of loan modification requests.
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(New York)

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While Federal Housing Finance Agency director Mel Watt is still dithering about whether to finally allow principal write downs to help troubled borrowers keep their homes, private investors who’ve already gotten a steep discount on distressed debt sold by government-sponsored entities are using hard-knuckle tactics with homeowners.

“The investors buying these loans are not interested in offering home-saving solutions to struggling homeowners,” said Jacob Inwald, director of foreclosure prevention at Legal Services NYC.

As government-sponsored enterprises including Fannie Mae sell delinquent mortgage loans to shore up their balance sheets and banks pull back on this market, private investors are muscling in. They range from small fry like Virginia-based Infinite Customer Systems to $60 billion Texas-based private equity titan Loan Star Funds. Loan Star is the backer of mortgage servicer and originator Caliber Home Loans, a major new player in New York.